Can we expect lower power rates?
According to Meralco, 7 million consumers are paying an average of P1.06 per kwh—less than what they used to pay. Photo from Shutterstock.
Can Consumers Expect Lower Power Rates?
For Meralco, keeping the lights for its customers has never been more important.
by Manny Mogato
The country’s largest power distribution company has brought down its rates in the first six months this year to help ease the burden of consumers during the pandemic.
In its financial results briefing, the Meralco said its 7 million consumers are paying an average of P1.06 per kilowatt hour—less than what they used to pay in the first half of the previous year.
Meralco’s average retail rate was at a low of P8.19 per kilowatt hour in the first six months of 2020 from the same period last year of P9.25 per kilowatt hour.
Manuel V. Pangilinan, Meralco’s chairman, said the distribution utility would continue to find ways to provide reliable and affordable electricity to its household and commercial consumers, especially during the time of pandemic.
“Meralco recognizes its critical role in enabling industries, and now, more so, as businesses restart and transition to the ‘new normal’,” Pangilinan said.
“Even while everyone faces uncertainty of an unknown future, the entire Meralco organization is committed to and will remain relentless in ensuring network reliability, customer care and workplace integrity. We also reiterate our commitment to sustainability and to powering the good life as well.”
He said profitability has taken a backseat in the first half of the year as Meralco’s commitment “to keep the lights on” and help the Duterte government in its fight against the coronavirus pandemic.
Meralco’s Consolidated Reported Net Income for the first six months of 2020 dropped from P12 billion in 2019 to P6.8 billion this year due to various challenges, like lower cash inflows, delayed capital expenditures and the limitations resulting from the pandemic and lockdown.
“While our first half results provide some encouragement, uncertainty remains as the effects of COVID-19 continue to impact the nation,” Pangilinan said. “We are moving with caution but remain positive that a recovery is in the offing.”
He said the company was able to improve its service performance, in many ways, including lowering system loss even further to benefit the consumers.
Meralco’s system loss performance improved by 0.19 percent points against last year and is 1.34 percent points lower than the government’s cap of 7.25 percent.
It has brought down power rates as Meralco’s generation charges decrease by 17 percent due to the implementation of new Power Supply Agreements (PSAs), lower wholesale electricity spot market (WESM) prices and the invocation of force majeure claims during the lockdown.
Moreover, there was a 2 percent decrease in transmission charges due to lower power delivery service charges, coupled with lower average billing demands.
Meralco said there was also a 21 percent decrease in system loss charges as a result of lower generation and transmission charges and reduced system losses.
The distribution rate has remained the same since 2015, but with the larger share of residential sales brought about by the lockdown, there was an 11 percent increase in average distribution charge.
There was also a 74 percent decrease in FIT-all rate with the implementation of lower FIT-all starting in February and the suspension of FIT-all collection for the months of April and May.
Meralco is looking for more ways to bring down power rates. As an example, it invoked force majeure claims on power generators based on its power supply agreements as demands fell when the government imposed a lockdown from mid-March.
The power distribution avoided paying full fixed charges for capacity from generators, saving consumers more than P1.8 billion because of the force majeure claims.
The biggest component of consumers’ monthly electricity bill comes from generation charges but Meralco’s force majeure claims from its power suppliers lowered generation costs.
The low fuel cost during the first half of 2020, also brought about by the pandemic, likewise contributed to bringing down the generation costs as well as lower pricing at WESM as the condition of the Luzon grid improved with lower power demand.
Apart from bringing down power rates, Pangilinan said Meralco also contributed to the government’s Build, Build, Build projects during the pandemic.
It has also provided financial assistance to support the cost of national and local COVID-19 health facilities within the utility’s franchise area.
Related: “I am Jennifer Nepomuceno, COVID-19 survivor”
To learn more, contact your Relationship Manager, call 16210 or email us at corporatepartners@meralco.com.ph.
Story originally posted on Power Club.